• SPY  and IWM helped on Wednesday by inflation data.
  • US CPI was in line with economist expectations.
  • SPY still grinding slowly higher, IWM rangebound

Another day another all-time high for the SPY on Wednesday as the US CPI data was in line with expectations and so not too shocking to equity traders. We had called this one higher so were caught off guard by the in-line print. The inflation data is still high and getting higher but not yet high enough to cause the sell-off that many have been anticipating. Recent CFTC data shows shorts getting squeezed and covering futures positions in the S&P while fund managers have also reduced long positions. The longer this grind higher continues the more likely we are to eventually see a more significant bust but for now, price is the ultimate indicator as we say and that is still guiding us higher. The US ten-year yield has refused to budge following the CPI data on Wednesday meaning the bond market may be preparing itself for a showdown with the Fed. However, the Put/Call ratio continues to move higher as more and more participants become convinced of the market being too high and ready for a correction. This would signal to us that this grind has more room to go yet. If the majority are bearish and the market keeps going up then that draws its own conclusions. Once the bearish masses have bailed and covered shorts is when this SPY is more likely to turn over.

SPY stock forecast

We realize we are flip-flopping our bearish call from yesterday but being in the market means changing your mind and being flexible. You have to be able to go with the flow and flip sides from time to time. We expect the grind to continue and frustrate the bearish masses for a little while longer. The momentum indicators are providing warnings signs with bearish divergences across the Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and Commodity Channel Index (CCI) so please use careful risk management and stops. $441.31 is the key to hold the bullish move.

Our levels from yesterday still hold short-term support at $441.31 as mentioned. If this were to break there is a small support zone at $423 with the volume profile lending support here. The preferred buying point though is at $414.70. This may seem like a strong call, nearly 10%, but it only brings us back to where the SPY was trading in July. The volume profile is at its strongest here, so this level needs to hold. A break could be sharp, as volume dries up worryingly until $390. 

Short term we see more bears being frustrated by the grind higher but in the medium term be prepared for a sell off. Breaking $441 would be the current signal for this we feel.

IWM stock forecast

A quick look over at the broader Russell 2000 (IWM) shows it is still stuck in a range and looking to breakout. Watch this one for a possible leading indicator. 

The RSI is gaining strength and trending higher and IWM is above the 9 and 21-day moving averages so is skewed more to the upside. 


Like this article? Help us with some feedback by answering this survey:

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content

Recommended content

Editors’ Picks

AUD/USD Price Analysis: Bounces on Double Bottom, bullish reversal needs more filters

AUD/USD Price Analysis: Bounces on Double Bottom, bullish reversal needs more filters

The AUD/USD pair is going through a correction phase after facing barricades around 0.6920 in the New York session. The asset displayed some signs of reversal on Thursday after finding bids while testing two-week-old support at 0.6850.


USD/JPY inches towards 136.00 on higher-than-expected Unemployment data

USD/JPY inches towards 136.00 on higher-than-expected Unemployment data

The USD/JPY pair is aiming towards 136.00 as the Statistics Bureau of Japan has reported higher-than-expected Unemployment data. 


Gold Price Forecast: XAU/USD struggles to defend $1,800 as DXY rebounds ahead of US ISM PMI

Gold Price Forecast: XAU/USD struggles to defend $1,800 as DXY rebounds ahead of US ISM PMI

Gold Price (XAU/USD) holds onto the previous day’s bearish bias, despite taking rounds to the multi-day low surrounding $1,805 during Friday’s Asian session.

Gold News

One of the most iconic American rappers is bullish on Ethereum despite recent price slump

One of the most iconic American rappers is bullish on Ethereum despite recent price slump

Snoop Dogg and his son Champ Medici are one of the most prominent celebrities in the Ethereum NFT ecosystem. Dogg argues that the bear market is weeding out all the people who are not supposed to be in the space.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!